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Wednesday, September 23, 2020

Explained: What are super apps, why is India getting another one?

A country or a region becomes super app-ready when its large base of the population is smartphone first instead of desktop and the ecosystem of apps customised to local needs is not evolved.

Written by Aashish Aryan , Pranav Mukul , Edited by Explained Desk | New Delhi | Updated: August 25, 2020 4:10:57 pm
Explained: What are super apps and why is India getting another oneA super app is a platform developed by a company offering various services under one umbrella. (Representational)

Salt-to-software conglomerate Tata Group is planning to launch an all-in-one super app by the end of this year or early next year. The omnichannel digital platform, expected to bring together all the consumer-facing businesses of the group, is likely to be developed by the newly formed entity Tata Digital.

What are super apps?

A super app is a platform developed by a company offering various services under one umbrella. For example, China’s WeChat, which started out as a messaging app, expanded into payments, cabs, shopping, food ordering, cab services to become a super app. A physical world comparison of a super app would be a mall, which allows retail space to various brands and shops across businesses and verticals.

Who makes super apps?

Typically, companies that have a slew of services and products to offer tend to consolidate these offerings into a super app.

The concept first emerged in China and southeast Asia where internet companies like WeChat, GoJek, Grab leveraged the opportunity of customer traffic on their platforms that originally came for social media and communication needs by offering these customers additional services leading to increased revenue realisations.

However, in the west Asia region, a different approach has been taken. There, traditional business conglomerates — such as real estate firms Majid Al Futtaim Group, Emaar, Chalhoub Group — having a large portfolio with presence in shopping malls, grocery and entertainment are building digital assets. According to internet consultancy firm RedSeer, these businesses observe high customer footfall and high repeat purchase frequency, which when seen from the lens of online players is the most critical parameter for a super app in any region to grow. The plan of Tatas to get into aggregating its consumer offerings align more with firms in the Gulf region than the technology companies in China and southeast Asia.

Which companies in India are building super apps?

The Tata Group will be an entrant in an already crowded super app ecosystem of India. Currently, Reliance Industries, under its Jio umbrella, is consolidated various services and offerings such as shopping, content streaming, groceries, payments, cloud storage services, ticket bookings, etc. Further, Alibaba Group investee Paytm has also brought together services like payments, ticket bookings, games, online shopping, banking, consumer finance, etc into one app. Flipkart Group-owned payments app PhonePe has tied up with companies such as Ola Cabs, Swiggy, Grofers, AJio, Decathlon, Delhi Metro, booking.com, etc to offer these services from within its own app.

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Why do Indian companies want to build super-apps?

A country or a region becomes super app-ready when its large base of the population is smartphone first instead of desktop and the ecosystem of apps customised to local needs is not evolved. India has already become a market where a majority of those experiencing the internet for the first time are doing so on their mobile phones. This is one of the main reasons why Indian companies are looking at building super apps. Apart from increased revenue realisation due to consolidation of services at one place, such apps also provide companies large swaths of consumer data which can then be harnessed to learn more about user behaviour.

What are the concerns about super apps?

The very concept of a conglomerate trying to keep a customer within its own ecosystem for most services they might require increases the possibility of a monopoly. This is in addition to concerns of privacy in cases where a super app has onboarded third-party service providers. Experts pointed out that data collected by the master app could then be used to train machines in artificial intelligence and predict consumer behaviour even more accurately. It is one of the main reasons why super apps have not picked pace in countries such as the US and the UK, the experts said.

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